The Children’s Place announced it is lowering its revenue guidance to $454m-$456m and expects a decline in operating profits.
The retailer explained it is now working with its advisors, including Centerview Partners, along with lenders and potential lenders to secure new financing vital for sustaining ongoing operations.
Additionally, it is exploring “strategic alternatives” in the event securing new finance proves challenging.
The company highlighted it has been working to improve its liquidity position and strengthen its balance sheet to best position the company for the future.
Preliminary results for Q4 2023
- Net sales are expected to be approximately $454m to $456m, versus the previous guidance of $460m to $465m.
- Adjusted operating loss is expected to be in the range of 8-9% of net sales, as opposed to the prior guidance of adjusted operating income of approximately 2-3%. This will exclude certain non-recurring costs, the gain from the settlement of a lawsuit, and non-cash asset impairments
- Total liquidity as of 3 February 2024, is expected to be approximately $45m.
The Children’s Place pointed out that the adjusted operating loss reflects several factors: lower-than-expected merchandise margins due to aggressive promotions aimed at boosting sales, higher-than-anticipated split shipments to fulfil e-commerce demand, and increased inventory valuation adjustments.
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At that time, Jane Elfers, president and chief executive officer at The Children’s Place Inc, said the company’s bottom-line results were also negatively impacted in the third quarter by higher than-planned distribution costs driven by a combination of largely unplanned but addressable factors.